Cryptocurrency profits are taxable under the property transaction income category of personal income tax in most jurisdictions — including Taiwan. However, not every investor is required to file. Whether or not you need to report depends on transaction volume, jurisdiction, and annual income thresholds.
With the 2025 tax filing season running from May 1 to June 30, now is the perfect time to understand your obligations, avoid penalties, and explore legal ways to reduce your tax burden.
This comprehensive guide breaks down everything you need to know about cryptocurrency taxation: when it applies, how to calculate your liability, common misconceptions, and practical strategies for compliant reporting — all while protecting your digital wealth.
👉 Discover how to securely manage your crypto assets before tax season hits.
How Is Cryptocurrency Taxed?
Cryptocurrency taxation falls into two main categories: domestic transactions and overseas transactions. The classification determines how — and whether — your gains are taxed.
Key Definitions:
- Domestic vs. Overseas: Determined by the location of the withdrawal platform, not where you bought the asset.
- Tax Year Reference: Gains are assessed based on when you convert crypto to fiat (exit position), regardless of purchase date.
Domestic Transaction Income
This applies when you trade cryptocurrency on a Taiwan-based exchange and withdraw funds directly into a local bank account in New Taiwan Dollars (TWD).
Tax Treatment & Calculation
Any profit from selling or converting crypto must be declared as property transaction income under personal income tax. This includes:
- Capital gains from trades
- Profits realized upon withdrawal to TWD accounts
Even small withdrawals are traceable due to mandatory KYC (Know Your Customer) policies enforced across centralized exchanges. While banks only report single transactions over NT$500,000 under anti-money laundering regulations, this does not mean smaller transfers go unnoticed.
All transactions are logged and potentially accessible to tax authorities through exchange cooperation.
Myth Busting: "If I withdraw less than NT$500,000, I won’t get caught."
❌ False. Every KYC-verified transaction leaves a digital trail. Tax evasion risks far outweigh short-term savings.
Overseas Transaction Income
This covers scenarios like selling crypto on Binance for USD and transferring the funds via wire transfer to your Taiwanese bank.
Tax Treatment & Calculation
Such income is classified as overseas-sourced income. Under current 2025 rules:
- You must report overseas income if it exceeds NT$1 million annually
- Tax is only due if your total basic income (including other high-net-worth items) surpasses NT$6.7 million
This uses the Minimum Tax System (基本所得稅額), designed for high-income individuals with significant offshore earnings.
Common Misconception
"As long as my overseas deposit is under NT$6.7 million, I don’t owe tax."
❌ Incorrect. The threshold applies to the sum of all basic income components, not just foreign gains.
Core Components of Basic Income Tax
The Minimum Tax System aggregates several high-value income types:
- Net Comprehensive Income
- Overseas Income – Full amount included if over NT$1 million/year
- Specific Insurance Payouts – Over NT$37.4 million when beneficiary ≠ policyholder
- Securities Trading Gains
- Non-Cash Donations
- Investment Deductions – For qualified startups or biotech firms held long-term
- Separately Taxed Dividends
Understanding how these interact helps determine whether domestic or overseas exits are more tax-efficient.
👉 Learn how top investors track cross-border crypto movements ahead of tax deadlines.
Domestic vs. Overseas: Which Is More Tax-Efficient?
Your final tax obligation depends on comparing two figures:
- If Comprehensive Income Tax > Basic Income Tax:
→ Pay the higher comprehensive tax amount
Example: Pay NT$300,000 instead of NT$250,000 - If Basic Income Tax > Comprehensive Income Tax:
→ Pay the difference plus original tax
Example: Pay NT$350,000 total after a NT$100,000 top-up
💡 For frequent traders or high-volume investors, routing large withdrawals through overseas exchanges may keep total reported income below the NT$6.7 million threshold — deferring or eliminating tax liability.
Always simulate both scenarios before cashing out.
Step-by-Step: Filing Crypto Taxes
You can complete all reporting via the National Taxation Bureau’s e-Filing Portal. Here's how to correctly declare different types of crypto gains and losses.
Reporting Domestic Gains
During the “Income Entry” phase:
- Add a new entry under Property Transaction Income
- If cost basis is unknown, select:
“Property Transaction Income (Non-Real Estate, Unverifiable Cost)”
Claiming Domestic Losses
Losses can be deducted under Special Deductions, but:
- Must provide proof (transaction records, exchange statements)
- Annual deduction cannot exceed that year’s reported gains
- Unused losses can carry forward for up to three years
Reporting Overseas Gains/Losses
Under the Basic Income Tax section:
- Select category "76 – Property Transaction Income"
- Report gross income, costs, and associated fees
Overseas Loss Limitations
Unlike domestic losses:
- Cannot offset against domestic gains
- Can only reduce same-year overseas gains
- Excess losses cannot be carried forward
This makes timing and routing critical for loss utilization.
What Happens If You Don’t Report?
Failure to declare crypto income can lead to:
- Penalties based on unreported amounts
- Daily late fees (1% per 3 days overdue)
- Interest charges and audits
As of December 13, 2024, authorities had identified nearly NT$130 million in undeclared crypto income**, resulting in over **NT$34 million in combined taxes and fines.
The Ministry of Finance continues enhancing data collection systems to detect unreported digital asset activity.
Ignoring tax duties is not just risky — it's increasingly impossible.
Legal Ways to Reduce Your Crypto Tax Burden
1. Route Large Withdrawals Overseas
Withdrawals exceeding NT$500,000 via international platforms (e.g., SWIFT transfer) qualify as overseas income — benefiting from higher reporting thresholds.
2. Keep Detailed Cost Records
Maintain records of:
- Purchase prices
- Transaction fees
- Transfer costs
These reduce taxable gains when properly documented.
3. Spread Gains Across Years
Avoid lump-sum reporting by staggering sales over multiple years. This prevents crossing key tax brackets or thresholds in a single year.
✅ Pro Tip: Consult a licensed tax professional before implementing any strategy. Compliance ensures long-term financial safety.
Frequently Asked Questions (FAQ)
Q: Do I need to pay tax if I only made small profits?
A: Yes, if you realized gains — even small ones — they should be reported as property transaction income unless offset by losses.
Q: Are NFT or DeFi profits also taxable?
A: Yes. Any digital asset generating capital gains is generally treated similarly to cryptocurrency under current guidance.
Q: Can I use crypto losses from one year to reduce next year’s taxes?
A: Only for domestic losses — up to three years forward. Overseas losses cannot be carried forward.
Q: Does holding crypto without selling trigger tax?
A: No. Tax applies only upon realization (selling or exchanging for fiat or another asset).
Q: Are gifts or airdrops taxable?
A: Potentially yes — especially if they have measurable fair market value at receipt.
Q: Can I file taxes without detailed exchange records?
A: You can estimate using available data, but unverified claims may raise red flags during audits.
Final Reminders for 2025 Tax Season
The deadline is June 30, 2025. Late payments incur a 1% penalty every three days, compounding quickly.
If you're unable to pay in full:
- Use the e-filing system to apply for installment plans
- Avoid penalties by acting before the deadline
Stay compliant, keep accurate records, and consider strategic planning with professional advice.
👉 Get ready for tax season with tools trusted by savvy crypto holders worldwide.